Browse by year:

State aid: Investigation opened into State measure in favour of Scandinavian Airlines (SAS)

19.6.2013

PR(13)53

Today, the EFTA Surveillance Authority opened a formal investigation regarding the participation of Norway in a revolving credit facility (RCF) in 2012 in favour of SAS.

SAS is the major air carrier in Scandinavia. Its four biggest shareholders are Sweden (21.4%), Denmark (14.3%), Norway (14.3%) and the Knut and Alice Wallenberg foundation (KAW) (7.6%). SAS'sfinancial position has been weak for several years and its financial performance has deteriorated significantly since 2008.

In 2012, SAS prepared a business plan with the aim of becoming profitable again. In this context, an RCF which was granted by a number of banks to SAS in the past was replaced by a new RCF of SEK 3.5 billion (around €400 million). Half of the new RCF is provided by Sweden, Denmark and Norway in proportion to their shareholding in SAS and the remaining half is provided by KAW, together with most of the banks that participated in the previous RCF.

The Authority has doubts as to whether the new RCF was carried out on market conditions, as the Authority cannot exclude that the banks' participation was influenced by their involvement with SAS under the previous RCF, as well as by the States' participation in the new RCF. Furthermore, the Authority has doubts regarding the reliability of the business plan, on the basis of which the States decided to participate in the new RCF. It has therefore opened an inquiry into the participation of Norway in this measure.

The Authority will now call for further comments from the Norwegian authorities and third parties with an interest in the case. A non-confidential version of the Authority's decision to open the formal investigation will be published shortly on the Authority's website and in the Official Journal of the European Union.

The decision to open a formal investigation procedure does not prejudge the outcome of the investigation.

Background information on state aid principles and procedures

The EEA Agreement contains a general prohibition on state aid in order to prevent distortions of competition and negative effects on intra-EEA trade. The rules seek to ensure a level playing field for companies across Europe, and to prevent government assistance being used as a form of protectionism in the absence of trade barriers. However, the prohibition is subject to exceptions, recognising that government intervention can be necessary to correct market failure, and for other purposes.

The state aid rules that apply to the EEA EFTA States are enforced by the Authority. In its enforcement of the rules, the Authority has equivalent powers and similar functions to those of the European Commission.

Public interventions in companies that carry out economic activities can be considered free of state aidwithin the meaning of theEEAruleswhen they are made on terms that a private player operating under market conditions would have accepted (the market economy investor principle – MEIP). If a transaction is carried out simultaneously and under the same terms and conditions by public bodies and private operators who are in a comparable situation (pari passu transaction), it can normally be considered that suchatransaction is in line with the MEIP.

If the MEIP is not respected, the public intervention constitutes state aidwithin the meaning of Article61(1) of the EEA Agreement, because it procuresan economic advantage to the beneficiary that its competitors doesnot have. TheAuthoritywill then proceed to assess whether such aid can be foundto becompatible with theEEA Agreement.

Decisions adopted by the Authority can be challenged before the EFTA Court.

As noted above, the measure under investigation involves participation by Norway, Sweden and Denmark. In this regard, the Authority is investigating the participation of Norway in the new RCF, whilethe participation ofSweden and Denmark is being investigated bytheEuropean Commission whichhas adopted a parallel decision. For further information see the website of DG Competition.